Pre-Budget Report: Child benefit and tax credits

Increases in child benefit and tax credits are both seen as easy ways to put money directly into the pockets of families, with ministers aware the cash is likely to be spent rather than saved.

Child benefit was already set to go up by at least 5% because it is index-linked to the unusually high September RPI figure, but parents can now look forward to an increase of more than £1.20 to £20 a week for the first child.

Second and subsequent children will get nearly £14.

Child tax credits were also in line for rises as Labour views any increase as a form of 'tax cut' that rewards working parents.

Antipoverty campaigners have said that an extra £3bn is needed if the Government is to meet its target to halve child poverty by 2010/11.

Campaigners wanted the amount paid to the youngest child to match that of the oldest, which is £5 more.